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Whilst the 2021 Budget did not seek to implement income and/or capital gains tax rises as had been expected or seek to further delay the implementation of the off-payroll working rules for the private sector as had been hoped, the budget – hailed as protecting the 'jobs and livelihoods of the British people' - has a number of implications for employers and their employees. The key ones of note being:
The CJRS has been extended from the end of April 2021 to 30 September 2021, enabling businesses to continue to furlough employees for the summer period, during which the government is clearly hopeful that all restrictions can be lifted and the economy given a much needed boost. Employees will remain entitled to receive 80% of their normal wages (subject to a monthly cap of £2,500) for the duration of this period, however the amounts an employer can claim will be reduced on a sliding scale as follows:
There are no changes in the eligibility requirements for claims relating to the period up to 30 April 2021 (meaning that to furlough an employee prior to this date, the employee must have been on the employer's payroll (and included on a PAYE Real Time Information submission) prior to 30 October 2020). However, to furlough staff from 1 May 2021 onwards, employees must have been employed (and included on an RTI submission) prior to 2 March 2021, enabling employers to utilise the furlough scheme for any employees recruited in the period November 2020 to March 2021.
In accordance with the extension to the CJRS, the Self-Employed Income Support Scheme (SEISS) – available to all those whose income is made up of at least 50% of self-employed work and who had a trading profit of less than £50,000 in 2018-2019, or an average trading profit of less than £50,000 over the respective financial periods between 2016 and 2019 - has also been extended to the end of September 2021. In addition, and in welcome news to those who missed out on the first three grants due to the eligibility requirements, the government has also widened access to the grants, such that all those who have filed a tax return for the 2019/2020 tax year by midnight on 2 March 2021 will now be able to benefit from the SEISS.
A fourth grant will cover the period from February 2021 to April 2021, providing up to three months of support at 80% of the business' average trading profits (subject to a cap of £7,500) and a fifth grant will cover the period from 1 May 2021 to September 2021.
The value of the fifth grant will depend on loss of income, providing the following support:
There was no further delay to the planned changes to the off-payroll working rules for the private sector which will therefore continue to come into force on 6 April 2021, requiring all large and medium sized businesses to determine the employment status of contractors who are providing their services via intermediaries. However, as part of the Budget, HMRC issued a policy paper to provide helpful clarification as to the meaning of 'intermediary' for the purposes of the legislation.
Previously, the provisions had been expanded so as to potentially apply to any arrangement where the worker operated through a company, even those where the contractor's full payment had been appropriately taxed as employment income (for example, where the contractor is operating as an employee of an agency or an umbrella company). HMRC have confirmed that this was unintended and have clarified that the provisions will only apply to intermediaries where (i) the contractor has a material interest in that company; or (ii) the contactor has an interest in the company that is less than material, and receives a payment from the company which can reasonably be taken to be a reward for the contractor's services and which is not wholly taxed as employment income.
Further detail on the off-payroll working provisions can be found here.
Both the tax free personal allowance (of £12,570) and the higher rate income tax threshold (of £50,270) will be frozen from April 2021 to 2026. In addition, the government has confirmed the extension to the 2021/2022 tax year of the income tax and NICs exemption for both employer reimbursed expenses covering the cost of home office equipment and COVID-19 antigen tests provided or reimbursed by employers.
The government is looking to extend and increase the incentive payments made to employers in England who hire new apprentices. In 2020, an incentive payment of up to £2,000 was introduced for all new apprentices hired between 1 August 2020 and 31 March 2021, however the value of the payment was dependent on age.
In the budget, the government has increased the incentive payment to £3,000 per apprentice hired – irrespective of age – between 1 April 2021 and 30 September 2021.
There is also additional funding of £7 million for 'portable apprenticeships' (which enable apprentices to work across multiple projects with different employers) and £126 million being made available to create 40,000 more traineeships for 16-24 year olds in the 2021/2022 academic year.
The budget included a range of immigration measures designed to help highly skilled and skilled international workers to come to the UK and support business growth. These included the introduction of an 'elite points based visa' by March 2022; amendments to the 'global talent visa' (for which holders of certain international prizes and winners of scholarships will now be deemed automatically eligible); and the introduction of a new 'Global Business Mobility Visa' by Spring 2021 enabling overseas businesses to establish a presence in the UK.
Whilst full details are yet to be published, the government has confirmed that a 'scale-up' stream will be included in the elite points based visa category, providing a fast-track process for individuals with a job-offer from a pre-approved UK scale-up business. It remains unclear what criteria businesses will need to satisfy for approval in this regard, however it is anticipated that it will be available to support a wide-range of high-growth businesses.
In addition, the government has confirmed its intention to modernise the immigration sponsorship system and has undertaken to publish a delivery roadmap in the summer.
The government also launched a Call for Evidence in respect of the current Enterprise Management Incentive (EMI) scheme eligibility requirements, potentially opening the door for smaller private companies (who are currently ineligible) to offer such schemes. The Call for Evidence closes on 26 May 2021.
